Consumer advocate needed: Senate committee

Many Australian households are struggling with rising electricity prices and often have to decide between paying the utility bill, buying food or keeping a roof over their heads, a parliamentary inquiry has found.

The Senate committee charged with examining the reasons behind a 40 per cent hike in prices over the past three years handed down a 200 page report on Thursday calling for the establishment of a national body to advocate for consumers.

It also recommended consumers be given the choice of switching off during peak demand times when electricity costs soar, and that the Australian Energy Regulator (AER) be given greater powers.

But the report said lower income households, including young families, were spending more on electricity and might have little room to use less power during peak periods.

"Many Australian households are finding it difficult to absorb the additional cost of higher electricity bills and are being forced to make challenging decisions about the allocation of household income to essentials such as rent, food and utilities."

Of the 10 million electricity customers in Australia, 88 per cent are residential.

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But households use just 27.7 per cent of the electricity generated, with the remainder being taken up by business.

The four major factors affecting prices were industry labour costs and executive salaries, dividend payments to state government utility owners, unnecessary infrastructure spending or `gold plating' and "opportunistic" profit-taking by operators.

However, the committee also said it was hard to address these factors because there was not enough information about their exact contribution to price rises.

It said the AER delivered a report each year breaking down the exact components and contributors to electricity prices.

It also proposed a national consumer advocacy body to represent the views and interests of consumers in the National Electricity Market regulatory process and to provide simple information about the market and pricing.

"The recommendations of the committee, if adopted, will put an end to gold-plating of assets by network businesses, will save consumers hundreds of dollars on their electricity bills and will improve energy efficiency," committee chair and Labor senator Matt Thistethwaite told parliament.

The committee also suggested a three-tier pricing model under which small to medium consumers would pay a flat network tariff, unless they opted to install smart meters which make it easier to manage power use.

"Transitioning to cost-reflective pricing in this way should help to ensure that low income and vulnerable consumers are not adversely affected in circumstances where they are unable to shift their electricity consumption away from peak periods," it said.

Prime Minister Julia Gillard wants state and territory leaders to agree at a Council of Australian Governments meeting in December to a package of measures to take the pressure off power prices and make the electricity sector more efficient.

Ms Gillard argues power costs have risen significantly because state-owned electricity corporations have been "gold plating" their networks and paying large dividends to governments.